It seems that it is not only the little guy that is getting swept up in the mortgage crisis. You would have thought that the mortgage crisis would not have affected a well known and long lasting celebrity like Ed McMahon. But, it seems that it is not only middle class Americans that are in desperate need of refinancing their mortgages. I doubt that his credit status was considered subprime or at risk. One would wonder why he was not able to refinance his mortgage. Is it the credit crunch or has he been living past his means and his health issues just brought his financial problems to the forefront.
Whatever the case may be, it seems that he has found himself in the same financial position that many Americans are in today. Either in a mortgage they cannot affor or in a mortgage they cannot refinance. It is a shame to see a celebrity icon such as Ed McMahon in such dire financial circumstances.
One would wonder why he even had a mortgage. More often than not celebrities do not carry mortgages on their homes. They normally pay cash for their mansions. Why? When you are talking about financing a multi million dollar home the interest expense is huge. For instance, McMahon’s 5.75 million dollar mortgage would cost him about $35,000 per month. That does not include any other expenses and is calculates at the rock bottom interest rate of 5.75 percent fixed for thirty years. So, you see it makes no sense for mansions to be bought with a mortgage. It is generally just too expensive
The credit crunch and mortgage crisis has only begun. Refinancing of troubled loans has always been difficult. But, this story only highlights how difficult it has become for mortgage holders to refinance their loans with payments they can afford. More and more mortgages are going into default. That is not to say they are going into foreclosure.
A Notice of Default on a mortgage is only the beginning of the foreclosure process. In essence a Notice of Default is tantamount to a bill collector knocking on your door telling you to pay up or else. It signals the intent of the mortgage holder to file a foreclosure lawsuit, also known as a lis pendens; Nothing more nothing less.
Unfortunately, more and more Americans are finding themselves in the same situation as McMahon; financially ruined either due to health issues or because of the downturn in the economy. With the tightening of the credit markets, it was only a matter of time before celebrities living above their means start defaulting on their mortgages as well.
